While still lagging behind many of its neighbours in the Asia-Pacific region, the ICT sector in Papua New Guinea has seen significant progress in recent years, which has helped ensure expansion of coverage and offerings. An increase in sector investment has helped both local and international companies expand into rural areas, while telecoms providers have also been able to bring more affordable and faster services to a greater share of the population.
However, isolated parts of this large and sparsely populated country are still having difficulties in achieving connectivity, and a lack of affordability, despite recent improvements, remains an issue for mobile phone and internet users.
To address these challenges, the government is looking to improve infrastructure in rural communities and upgrade the mobile data network from 3G to 4G in more parts of the country. Other plans include a planned undersea, high-speed telecommunications cable, which is to be largely funded by Australia and is expected to be completed by the end of 2019, significantly improving internet speeds and capacity.
By the Numbers
PNG’s internet penetration rate reached 11.7% in 2016, a significant increase from 6.5% in 2013 and 1.3% in 2010, although the figure is still low compared to its neighbours. Indonesia and Fiji, for example, had internet penetration rates of 54.7% and 46.8%, respectively, in 2017.
The mobile penetration rate, meanwhile, is around 50%, according to a report by Australian telecommunications research firm BuddeComm in 2018. This marks a significant increase from around 1% in 2007, the year Jamaica-based telecoms provider Digicel entered the market. In 2017 former ICT Minister Jimmy Miringtoro said around 90% of the population could now access mobile cellular communications.
Given the relatively low penetration, PNG’s ICT sector has significant potential for growth, but some major barriers still need to be overcome. These include a large rural population dispersed across remote communities, affordability, and an underperforming electricity grid, to which only about 12% of the population is connected. As such, even fixed-line services struggle to reach rural areas, and the broadband market is mainly confined to urban centres.
Indeed, it can be very difficult for telecoms companies to expand services to rural communities. There are many daily challenges, such as regular power outages, vandalism of towers and unreliability during times of heavy rain. Demand for services is high, but internet reliability remains an issue.
Partnering for Growth
Partnerships with other countries and international organisations are helping the ICT sector overcome some of the challenges it faces. In addition to the undersea cable being provided by Australia, rural areas will also benefit from a new World Bank programme, which will provide mobile money services to remote areas – another move that could improve the economic prospects for the country’s rural citizens. In 2018 PNG is also chairing the APEC forum, culminating in the annual leaders’ summit in November. The theme for the year is “Harnessing inclusive opportunities, embracing the digital future”, with the programme focused on improving connectivity and digital inclusion.
Oversight & Planning
The regulatory body in charge of overseeing the industry is the National Information and Communications Technology Authority (NICTA), which was formed in 2010. The main responsibilities of the authority are to regulate television and radio broadcasting and the internet; to manage licensing, both for spectrum and operators; and to encourage and promote development.
The government has targeted continued growth in the ICT sector. This has been emphasised in Vision 2050, PNG’s overarching long-term blueprint for addressing infrastructure gaps and maintaining economic stability. The plan calls for the establishment of a technical vocational training institute and widespread implementation of ICT infrastructure.
The state has also launched the PNG Development Strategic Plan 2010-30, which aims to increase mobile, internet, and television and radio penetration to 80%, 70% and 100%, respectively. According to the plan, the government will focus on building public-private partnerships with both national and international companies to build out the rural satellite network and ensure international best practices in the sector.
In March 2018 media reported that a taskforce, including the PNG Digital Commerce Association, was working with the government on a National ICT Roadmap to solidify policies for the rollout of more advanced technologies, providing businesses with a clear path forward. Launched in May, the plan aims to develop six key areas: infrastructure, governance, services, skills, business environment and safety.
Both short- and long-term measures are being taken to improve affordability of ICT services, a lack of which stems partly from low international internet bandwidth and little high-speed domestic infrastructure, as well as the challenges associated with having a widely dispersed population.
To address affordability concerns, in late 2017 Sam Basil, the minister of communications, information technology and energy, directed all mobile network operators to alert subscribers when they have exceeded their data usage allowances. In comments to The National, Basil said that the move would enable customers to consider how they can better manage their data allowances.
Another measure the government has taken is to introduce mandatory SIM card registration, stating that phone users who do not register ahead of the deadline, set to July 31, 2018, will no longer be able to use mobile services. While many other countries have introduced mandatory SIM card registration, PNG faces some unique challenges in that people must register in person due to the lack of a national identification database. This can create problems for those in rural areas, who may need to travel long distances to a registration centre.
On the Line
There are three major mobile service operators in PNG: Digicel, Bmobile (a subsidiary of Vodafone) and Citifon ( a subsidiary of Telikom PNG). Digicel, which entered the country in 2007, had an estimated market share of 94% in 2016, according to DICTA data. In contrast, Bmobile held a 4.8% market share in the same year, and Citifon 1%.
However, the landscape has changed following the 2017 merger between the state-run entities Bmobile, DataCo and Telikom PNG. With Digicel dominating the market, the merger aims to pool SOE resources to create an entity that can become a serious competitor in the market. The government hopes the move will benefit consumers by lowering prices and increasing the quality of services being offered by the operators (see analysis). As the country embraces mobile technology, fixed-line penetration remains low, at just 1.9%, and Kumul Telikom dominates the industry.
Major Projects
By far the largest development in PNG’s ICT sector is the planned undersea telecommunications cable that will extend from Australia to PNG and the Solomon Islands. The project is financially supported by the Australian government.
In November 2017 then Australian Prime Minister Malcolm Turnbull and his PNG counterpart Peter O’Neill announced that the two countries would work together to lay the undersea, high-speed telecommunications cable to the PNG capital. Expected to take two years to complete, the project will cost an estimated $144.2m, with Canberra covering around two-thirds of the cost. The 4000-km subsea cable should improve internet speeds and reduce costs, ending PNG’s reliance on outdated and expensive technologies (see analysis). The cable is scheduled to be operational by the end of 2019.
Additionally, 4G services are being rolled out in more remote parts of the country. In January 2018 more than 20,000 people in the Ialibu-Pangia area of the Southern Highlands Province came online after they were provided 4G technology by Telikom PNG. At the opening ceremony for the start of the Ialibu-Pangia service, O’Neill challenged Telikom PNG to expand their 4G services across the entire country.
Trading Up
One sector expected to benefit from higher internet speeds and greater connectivity is e-commerce – a segment that is already gaining traction in PNG as retailers and service providers slowly move some services online. Banks, for example, now allow customers to use electronic forms for bank transfers or for paying bills, and enacting effective legislation would provide greater clarity for companies looking to invest and expand in this area. “When digitalisation and innovation starts to spread around PNG, either from infrastructure developments or trade deals, you can be confident the rest of us in the food chain will also benefit,” David Toua, the chairman of the APEC Business Advisory Council, told OBG.
In February 2018 prospects for the segment were bolstered by the announcement that the European Union would work with the PNG government to develop e-commerce legislation through a trade-related assistance programme.
However, one of the challenges that could hold back e-commerce development is the need to train staff to use the technology effectively. Given the dearth of skilled local labour, the need to make significant investments in training initiatives has been a common hurdle for domestic and international firms.
Rural-Urban Divide
An estimated 87% of PNG’s population lives in rural settlements, and many reside in incredibly remote areas. The mountainous landscape of much of the country has made it very challenging to develop ICT infrastructure, so it is of no surprise that there is a significant digital divide.
There is growing awareness and demand for mobile services, but significant parts of the country remain uncovered. That said, connectivity has improved around the Highlands Highway – particularly between Lae and Mount Hagen, which is part of a multimillion-dollar Asian Development Bank (ADB) renovation programme to improve the country’s transport infrastructure and, as a result, boost economic productivity.
Internet penetration is also constrained by poor access to electricity in some regions. One potential way to overcome this through greater use of solar power, which is becoming increasingly cheap and efficient due to advancements in storage technology.
Restrictions
Nonetheless, as more citizens come online, internet phenomena such as social media are having a significant effect on society. Indeed, in May 2018 the government announced that it would ban Facebook access for a month while it considered the impact the site was having inside the country.
“The time will allow information to be collected to identify users that hide behind fake accounts, users that upload pornographic images, and users that post false and misleading information,” ICT minister Sam Basil told the Post Courier. He expressed concern not only about the spread of so-called “fake news”, but also about the impact of Facebook usage on economic productivity, as well as the risk for data breaches and the potential negative effects of targeted advertising. The date for the month-long ban had yet to be confirmed at the time of publishing.
It was not immediately clear what impact the move would have on the wider ICT sector, but restrictions on online communications could be a source of concern for some investors. Basil, however, has said the shutdown was part of efforts to enforce the Cybercrime Code Act, which was passed by in 2016. The law carries penalties for acts including copyright infringement, electronic forgery and “defamatory publication”, creating more certainty in the legal framework but potentially imposing constraints on the freedom of expression.
Human Resources
Unsurprising for a nascent industry, a lack of skilled human resources remains an issue for many firms operating in the ICT space. Troy Ware, the general manager of Port Moresby Electrical, told OBG that companies are often reliant on foreign expatriates training local staff, and that significant investment is required to provide training and services to foreign staff.
Ware added that while senior local staff members are involved in training, it is not enough to cover the needs of the whole market.
“The job market is quite fluid and predatory,” Ware told OBG. “If you invest in training, many other companies reap the benefits of your investments.” He suggested that PNG could benefit from more options for vocational training. In particular, the government hopes that its chairmanship of APEC in 2018 will allow the country to work with regional partners to explore possibilities for digital technology. Of particular interest is the potential for new technologies to provide inclusive outcomes in areas such as skills development, health care, entrepreneurship and tourism.
Small and Medium-Sized Entrerprises
Investment in vocational training might also help bolster the small and medium-sized enterprise (SME) sector, which is relatively small, with fewer than 50,000 such firms registered as of 2016. To foster growth in the sector, in March 2016 the government launched its SME Policy 2016. Aims include the creation of new job opportunities, the generation of sustainable economic growth outside the resources sector, and more equitable distribution of wealth.
The plan looks to have 500,000 SMEs registered in the country by 2030 – a move that could boost formal employment from 290,000 to 2m and reduce unemployment from 84% to 49% in the same period. The policy also aims to increase SMEs’ contribution to GDP from 10% to 50%, and to raise per capita income from $2000 to $9600. The authorities aim to achieve these goals by establishing strategies for entrepreneurial development, improving the legislative framework, developing transport and communications infrastructure and providing additional funding and support for SMEs looking to enter the market.
The plan will likely reduce unemployment and increase opportunities for locals to work at start-ups within the ICT sector. However, small businesses entering the market may have trouble competing against international, well-established firms that already have a foothold in the country – particularly with regard to high start-up costs and attracting staff.
ISP Environment
From a low base 10 years ago, more than a dozen internet service providers (ISPs) have moved into PNG’s market in recent years. Speed tests from Broadband Speedchecker, conducted in August 2018, found that state-run Telikom PNG had the fastest download speeds, reaching up to 10.25 Mbps, against a national average of 4.28 Mbps. Other high performing providers were Digitec PNG Limited, with 3.23 Mbps, Digicel (PNG) with 2.15 Mbps and MYNET ISP with 1.95 Mbps.
Foreign Investment Opportunities
PNG’s relatively low connectivity rates, at least compared to many of its neighbours, combined with planned communications infrastructure investments and the government’s drive to diversify the economy, mean there is significant potential for foreign investors who undertake the necessary due diligence before entering a uniquely challenging emerging market.
Most importantly, the planned subsea cable linking with Australia will significantly increase internet speeds and improve reliability, a situation that will make the country a more attractive destination for potential investors in all sectors.
Meanwhile, the centrality of the digital economy in the 2018 APEC agenda should provide much-needed opportunities for the public and private sector to learn how digital innovations are being deployed elsewhere to overcome bottlenecks to growth and leapfrog into new phases of development.
APEC Boost
The main APEC Summit will take place in Port Moresby in November, and is expected to attract leaders from some of the world’s most powerful economies and PNG’s leading trade partners. Talks between senior officials will focus on how to achieve the goals laid out under the APEC Internet and Digital Economy Roadmap.
Drafted in 2017, the key pillars of the roadmap include developing digital infrastructure, achieving universal broadband access, and creating government policy frameworks for the internet and digital economy. The primary goals are to harness advancements in ICT to enable more companies, including micro-enterprises and start-ups, to participate in cross-border trade and supply chains, and improve the employment opportunities and productivity of the workforce in the digital economy.
“Digital technologies are of particular importance to developing APEC economies such as Papua New Guinea,” Ivan Pomaleu, chair of APEC Senior Officials, told local media in March 2018. “This is because they offer the potential for rapid technological catch up in the right circumstances.”
Outlook
As the government will continue injecting competition to a consumer market that has been heavily dominated by one company. This should ultimately be positive for consumers, as service providers will need to become more creative with price plans and product innovations. Meanwhile, the subsea cable linking PNG with Australia should help to overcome the chronic problems of accessibility and affordability of ICT services, at least to some extent One area of concern is the lack of public funds for infrastructure development due to debt financing constraints, although so far the government has proved quite adept at capitalising on competing interests from other regional powers to secure backing for projects. Once infrastructure upgrades improve the operating environment, the onus will be on attracting needed investment in the ICT space to help the economy leapfrog forward in key areas, while also ensuring the workforce is prepared for the digital economy.
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